Financial reform is law, but what happens now?

President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law today, but this is far from the end of the road in financial reform. In fact, it's just the beginning of a longer process, and the devil is definitely in the details. The law gives most of the power to the regulatory agencies to actually make the rules, a process that could take up to a year, analysts say. And a history of lack of cooperation and regulatory overlap in some financial products from the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC) only complicates matters. Many experts still aren't sure of the exact ramifications of the law.

We spoke to several experts who all said that this is the beginning of a larger process. Former CFTC Chairman Philip McBride Johnson said of the law: “I don’t think there is any question that just about every time they could not get unanimity on a particular term they said ‘OK we are going to fob it off.’ Yes there is going to be a lot of rulemaking." He added, "There are two levels of this. First there is the normal rulemaking that follows all legislation but in this case in spades. There are also certain provisions where the CFTC and SEC  are instructed to come up with parallel stuff — and we know how successful they have been [in working together].”

The passage of the law came with the obligatory kudos from the CFTC and exchanges. In a statement, CFTC Chairman Gary Gensler said, "The Wall Street reform bill will – for the first time – bring comprehensive regulation to the over-the-counter derivatives marketplace." In a statement, CME Groupsaid, "The Dodd-Frank Act reinforces the core tenets of CME Group's markets: price transparency, liquid markets with low transactions costs, market integrity, customer protection, and safety and soundness in central counterparty clearing services." CME Group also added, however, that it would work to ensure new rules stemming from the law "do not place the U.S. financial services sector at a competitive disadvantage in our rapidly globalizing financial markets."

And if the analysts are correct, it could be a while before we know exactly how the new law will impact trading in the U.S. and worldwide.

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